Santa Fe Gold Announces Financial Results for September Quarter and Exploring Strategic Alternatives
15.11.2013 | PR Newswire
ALBUQUERQUE, New Mexico, November 15, 2013 /PRNewswire/ -- Santa Fe Gold Corp. (OTCQB: SFEG) today announced financial results for the quarter ended September 30, 2013. Santa Fe reported revenues of $1.2 million for the three months ended September 30, 2013 as compared to $5.6 million for the same prior year period, a 79% decrease of $4.4 million. Sales for the September 2013 quarter were adversely affected by various equipment issues related to undercapitalization of the Summit mine, which caused a decrease in production output for the period. Tonnage production fell 61% due mainly to increased downtime of primary underground production equipment. Also contributing to the decrease in revenue were lower average prices of gold and silver of 20% and 29%, respectively. The full version of the financial statements and management's discussion and analysis can be viewed on Santa Fe's website at www.santafegoldcorp.com or on EDGAR at www.sec.gov. Santa Fe has determined to temporarily suspend mining activities while it evaluates financing and strategic alternatives. During the period of suspension, key staff will continue to carry on limited activities. Said Dr. Pierce Carson, President and CEO, "We are in negotiations and advanced discussions with several strategic parties who share our objective to adequately capitalize our operations and bring Summit into full production. As such, we anticipate the suspension of mining operations will be temporary." Dr. Carson added, "We believe that properly capitalized, our Summit mine should attain targeted production levels and achieve attractive operating margins."
As noted in Santa Fe's Form 10-K for its fiscal year ended June 30, 2013, the Company has been exploring various alternatives to refinance its outstanding indebtedness and to provide the additional capital required to place its Summit mine on a sound financial footing. In this regard, the Company has been exploring all available strategic alternatives and has retained Jett Capital Advisors, a New York based investment bank, as its financial advisor. Although Santa Fe is in active discussions and negotiations with several strategic and financial parties, it has not made any decision to pursue any specific strategic or financing transaction or alternative, and there can be no assurance that a transaction will be consummated. If the Company fails to consummate a strategic or financing alternative, it will not have adequate liquidity to fund its operations, meet its obligations (including its debt payment obligations) and continue as a going concern, and will likely be forced to seek relief under the U.S. Bankruptcy Code.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
About Santa Fe Gold
Santa Fe Gold is a U.S.-based mining enterprise with producing mining operations in Lordsburg, New Mexico, and exploration and development projects in southwestern New Mexico, north-central New Mexico and Arizona. Santa Fe controls: (i) the Summit mine and Lordsburg mill in southwestern New Mexico, which began commercial production in 2012; (ii) a substantial land position near the Lordsburg mill, comprising the core of the Lordsburg Mining District; (iii) the Mogollon gold-silver project, within trucking distance of the Lordsburg mill; (iv) the Ortiz gold property in north-central New Mexico; (v) the Black Canyon mica deposit near Phoenix, Arizona; and (vi) a deposit of micaceous iron oxide (MIO) in western Arizona. Santa Fe Gold intends to build a portfolio of high-quality, diversified mineral assets with an emphasis on precious metals.
To learn more about Santa Fe Gold, visit www.santafegoldcorp.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable US securities legislation. All statements, other than statements of historical fact, included herein are forward-looking statements. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any mineral deposits that may be located, variations in the market price of any mineral products the Company may produce or plan to produce, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, the Company's inability to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies, and other risks and uncertainties disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2013 and its most recent quarterly reports filed with the United States Securities and Exchange Commission (the "SEC"), and other information released by the Company and filed with the appropriate regulatory agencies. All of the Company's US public disclosure filings may be accessed via www.sec.gov and readers are urged to review these materials.
See Accompanying Tables
The following information summarizes the financial condition of Santa Fe Gold Corp. at September 30, 2013, including its balance sheets for the three months ended September 30, 2013 and twelve months ended June 30, 2013, respectively, its results of operations for the three months ended September 30, 2013 and 2012, respectively, and its cash flows for the three months ended September 30, 2013 and 2012. The summary data for the three months ended September 30, 2013 and 2012, respectively, are unaudited; the summary data for the financial year ended June 30, 2013 are taken from our audited financial statements contained in our annual report on Form 10-K for the financial year ended June 30, 2013, but do not include the footnotes and other information that is included in the complete financial statements. Readers are urged to review the Company's Form 10-K in its entirety, which can be found on the SEC's website at www.sec.gov.
SANTA FE GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2013 2013
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 173,413 $ 115,094
Accounts receivable 826,265 273,797
Inventory 379,635 241,214
Prepaid expenses and other current
assets 433,336 457,377
Total Current Assets 1,812,649 1,087,482
MINERAL PROPERTIES 599,897 599,897
PROPERTY, PLANT AND EQUIPMENT,
net of depreciation of $11,847,007 and
$11,162,024, respectively 20,960,572 21,726,196
OTHER ASSETS:
Idle equipment, net 1,223,528 1,223,528
Restricted cash 231,716 231,716
Mogollon option costs 811,914 761,914
Deferred financing costs, net 241,603 323,348
Total Other Assets 2,508,761 2,540,506
Total Assets $ 25,881,879 $ 25,954,081
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,147,724 $ 2,748,549
Accrued liabilities 6,514,779 4,606,409
Derivative instrument liabilities 788,916 496,920
Notes payable, current portion 7,202,094 7,185,877
Completion guarantee payable 3,359,873 3,359,873
Total Current Liabilities 21,013,386 18,397,628
LONG TERM LIABILITIES:
Notes payable, net of current portion 288,900 330,192
Current portion, Senior subordinated
convertible notes payable
net of discounts of $50,586 and $60,482,
respectively 5,195,094 3,951,310
Asset retirement obligation 168,259 167,746
Total Liabilities 26,665,639 22,846,876
STOCKHOLDERS' (DEFICIT) EQUITY :
Common stock, $.002 par value,
300,000,000 shares authorized;
117,599,598 and
117,599,598 shares issued and
outstanding, respectively 235,199 235,199
Additional paid in capital 77,319,259 77,210,649
Accumulated (deficit) (78,338,218 ) (74,338,643 )
Total Stockholders' (Deficit) Equity (783,760 ) 3,107,205
Total Liabilities and Stockholders'
(Deficit) Equity $ 25,881,879 $ 25,954,081
SANTA FE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS)
(Unaudited)
Three Months Ended
September 30,
2013 2012
SALES, net $ 1,193,683 $ 5,578,654
OPERATING COSTS AND EXPENSES:
Costs applicable to sales 2,176,917 3,368,110
Exploration and other mine related
costs 90,613 127,421
General and administrative 843,238 774,042
Depreciation and amortization 774,459 1,085,344
Accretion of asset retirement
obligation 514 2,731
Total Operating Costs and Expenses 3,885,741 5,357,648
LOSS FROM OPERATIONS (2,692,058 ) 221,006
OTHER INCOME (EXPENSE):
Interest income - -
Foreign currency translation 12,289 -
(Loss) on derivative instrument
liabilities (291,996 ) (852,132 )
Accretion of discounts on notes
payable (9,896 ) (3,861 )
Financing costs - commodity supply
agreements (690,887 ) (1,331,437 )
Interest expense (327,027 ) (456,061 )
Total Other (Expense) (1,307,517 ) (2,643,491 )
(LOSS) BEFORE PROVISION FOR INCOME
TAXES (3,999,575 ) (2,422,485 )
PROVISION FOR INCOME TAXES - -
NET (LOSS) (3,999,575 ) (2,422,485 )
OTHER COMPREHENSIVE INCOME
Unrealized gain on marketable
securities - 2,045
NET COMPREHENSIVE (LOSS) $ (3,999,575 ) $ (2,420,440 )
Basic and Diluted Per Share data
Net (Loss) - basic and diluted $ (0.03 ) $ (0.02 )
Weighted Average Common Shares
Outstanding:
Basic and diluted 117,599,598 114,294,150
SANTA FE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
2013 2012
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (3,999,575 ) $ (2,422,485 )
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 774,459 1,085,344
Stock-based compensation 108,610 259,884
Accretion of discount on notes
payable 9,896 3,861
Accretion of asset retirement
obligation 514 2,731
Loss on derivative instrument
liabilities 291,996 852,132
(Gain) on disposal of assets (118,477 ) -
Amortization of deferred financing
costs 81,745 37,581
Foreign currency translation (12,289 ) -
Net change in operating assets and
liabilities:
Accounts receivable (552,468 ) (2,857,979 )
Inventory (138,421 ) 99,482
Prepaid expenses and other current
assets 24,041 (206,499 )
Mogollon option costs (50,000 ) -
Accounts payable and accrued
liabilities 2,303,722 1,917,406
Net Cash Used in Operating
Activities (1,276,247 ) (1,228,542 )
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from disposal of assets 249,000 -
Purchase of property, plant and
equipment (139,359 ) (256,232 )
Net Cash Provided by (Used) in
Investing Activities 109,641 (256,232 )
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from convertible notes
payable 1,250,000 -
Proceeds from issuance of stock - 1,873,261
Proceeds from notes payable 29,144 -
Payments on notes payable (54,219 ) (731,151 )
Payments on capital leases - (10,155 )
Net Cash Provided by Financing
Activities 1,224,925 1,131,955
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 58,319 (352,819 )
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 115,094 614,385
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 173,413 $ 261,566
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 7,015 $ 247,599
Cash paid for income taxes $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND
FINANCING ACTIVITIES:
Stock issued for services $ - $ 39,000
Contact:
Santa Fe Gold Corp.
Pierce Carson, President and Chief Executive Officer
+1(505)255-4852
6100 Uptown Blvd NE, Suite 600
Albuquerque, New Mexico 87110
www.santafegoldcorp.com